28542
AssignmentMultiple Choice

Economic Policy

Question 28542 • Personal Finance - EL3403

Country Q has noticed a rapid increase in their unemployment rate and a sharp decline in their GDP.What should policy makers focus on to help balance these economic indicators?

Answer
A
decreasing production and limiting government spending until demand increases
B
increasing the money supply so that consumers have more money to purchase goods
C
attempting to trade with other nations to increase production and create new jobs
D
implementing controls on wages, forcing employers to pay a minimum wage

Explanation

A rising unemployment rate alongside falling GDP suggests that the economy is contracting and demand for goods and services is weak. Increasing the money supply can encourage spending, giving businesses more customers and a reason to increase production and hire workers. Decreasing production and spending, as in choice A, would likely make the downturn worse.

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